Why Smart People Start Bad Businesses

I see smart people start bad businesses all the time.

Usually, it's not because the idea is bad. In fact, that's often the problem.

The market looks good. The margins are attractive. It's scalable. Maybe they've done the research, built an MVP and tested the concept.

Everything says this could work.

But there's one question I think gets overlooked:

Does this business fit the person who's going to have to run it?

I've been an entrepreneur and small business owner for more than 30 years, and I'm probably more susceptible to this than most.

I see opportunities everywhere.

I walk into a restaurant and immediately start analyzing why it works or why it doesn't. I see someone painting garage doors and wonder if there's a business there. Someone mentions a problem and my brain immediately starts trying to solve it.

Could you make money doing that? How big is the market? Could it scale?

That's the fun part.

But identifying a good business opportunity and identifying a good business for you are two different things.

We focus on the idea, not the job

Entrepreneurship celebrates the big idea.

Find an unmet need. Solve a problem. Identify a market. Build an MVP. Test it. Find product-market fit. Scale it.

All good advice.

But I think we're missing another test:

Founder-business fit.

Let's say you discover a great restaurant concept. Customers love it. The numbers work. You can imagine multiple locations.

Great business.

But do you want to manage hourly employees? Deal with someone calling in sick Saturday night? Control food costs? Handle customer complaints? Be there when everyone else is out enjoying themselves?

Maybe you've discovered a great restaurant business.

It just might be a terrible business for you.

The same thing happens when someone turns a hobby into a business.

You love restoring old cars, so opening a restoration shop sounds perfect.

Then you discover you're not restoring cars anymore. You're estimating jobs, ordering parts, managing employees, dealing with customers and trying to keep the pipeline full.

You built a business around something you love and accidentally created a job you hate.

There's more than product-market fit

We talk constantly about product-market fit, and we should.

But maybe founder-business fit deserves just as much attention.

Before asking, Can this scale? ask, Do I want it to scale?

Before asking, How much money could this make? ask, What will making that money require me to do every day?

And before asking, Is this a good idea? ask:

Is this a good idea for me?

The best entrepreneurs aren't necessarily the ones who recognize every good opportunity and pursue it.

Maybe they're the ones who know themselves well enough to recognize which good opportunities to walk away from.

Because a business can be profitable, scalable and even brilliant, and still be a bad business for you.